What You Don’t Know Can Hurt You: An FCA Primer

Note: This article was originally published by Drinker Biddle as a client alert. To view the Law360 version of the article, click here.

Right now, without your knowledge, your company could be a defendant in a lawsuit seeking tens of millions of dollars in penalties. The case could have been filed years ago, over conduct that could have happened years before that, by someone who could have continued to work for - and gather evidence against - your company ever since. Or perhaps the lawsuit has not yet been filed, but one of your current or former employees is preparing to do so. The government could be marshaling evidence through enhanced audits, administrative subpoenas, or other seemingly innocuous means that would not suggest that an investigation is even occurring. And you could conceivably remain in the dark until the government decides to unseal the complaint and issue a press release that lands your company in the spotlight that is page 1 of The New York Times.

It may sound far-fetched, but it happened thousands of times last year alone. And if your company does business with the government or participates in a federally-funded program, it could be next. All thanks to the False Claims Act (FCA). The FCA, which began as a response to a handful of unscrupulous Civil War defense contractors, has in recent years become a powerful weapon for fighting fraud on virtually any federally funded program. FCA actions can present unparalleled and often unfamiliar risks to your company, not only to its coffers but also its credibility and, in extreme cases, its continued existence. Retaining counsel that has successfully navigated and stays abreast of those risks is thus of critical importance.

The attached alert is a short history of and primer on the FCA, followed by a discussion of emerging trends in FCA litigation and best practices for avoiding and responding to FCA complaints.